A valuable lesson that I have learnt when interviewing someone is to ask them to walk me through a process that they do in an everyday life. It is amazing how this demonstrates their ability to break a simple process into a series of logical steps. The most common one that I have used is the boiling of an egg. When I ask potential BA's to break this down into logical steps, the one step they always seem to miss is the adding water or turning on the stove top.
It is not a make or break deal, but it is interesting to see their reaction as they delve into the steps. Some throw in full decision based processes like "is the electricity bill paid" and "is the pot suitable for boiling water". Another one is putting on a pair of shoes in the morning, you would be amazed at how many poor BA's are running around with no socks on :D
I always go back to the KISS principle as it works...
As for horror stories, it seems to be the generation of "I want it all and I want it now" (I am on the cuss of this generation so I am more than qualified to comment), or otherwise known as the "Gold/silver Platter" generation that I have had in interviews of late. I had to shake my head when I interviewed a recent candidate, when I asked "so if selected what attributes can you offer into our team of Business Analyst's", her response back (and she was serious), "what are they going to do for me?"
Nathan